Budget 2023: What insurance sector expects this year

The whole country has massive expectations from the Union Budget 2023-24 ahead of its announcement on 1 February. The insurance sector is anticipating several changes in the upcoming Budget as well. The value of gross premiums collected by life insurance companies in India is currently over Rs 5 trillion, according to Statista. An upward trend is being seen in the insurance penetration levels. However, the country has a far lower insurance penetration rate when compared to the global average. This leaves much room for growth in this sector. India’s life insurance penetration was nearly 3 per cent in the fiscal year 2021, while the non-life insurance penetration stood at 1 per cent, as per data by the India Brand Equity Foundation.Here are some of the expectations of the insurance sector from Union Budget 2023-24:Reduction of GST on health and life insuranceThe GST applicable on health and life insurance should be reduced to 5 per cent from 18 per cent to reduce the burden on customers. This is going to encourage more people to purchase insurance, increasing penetration in the market.Increasing health insurance deduction limitThe insurance sector suggests that the health insurance deduction limit under Section 80D of the Income Tax Act should be raised to Rs 1 lakh. At present, the current deduction limit stands at Rs 25,000. The increase in limit will be a way to increase penetration in the market as well as push customers to receive the right sum insured value.Separate section for a tax deductionSubhrajit Mukhopadhyay, executive director of Edelweiss Tokio Life Insurance, told Outlook India, “We expect the Budget to consider creating a separate section for a tax deduction on premiums paid towards life insurance.” He added that this move could effectively demarcate customers’ funds into long-term and short-term assets. Mukhopadhyay added that given the low single-digit penetration of life insurance in India, tax incentives are likely going to pay attention to first-time life insurers and the principal component of annuity income. He further said that special incentives may also be announced for women. who presently make up just more than one-third of the country's life insurance covers.Extending the deduction of Rs 50,000 to every pension schemeUnder section 80CCD, a deduction of Rs 50,000 is allowed for investments in the National Pension Scheme. According to the industry, if this limit is extended to every other pension scheme under life insurance, then it will encourage investment in annuities. The sector also believes that this is going to contribute towards the social security of senior citizens.Increasing the TDS exemption limit on the insurance commissionAccording to the sector, a hike in the Tax Deducted at Source (TDS) exemption limit on insurance commission (under section 194 D of the IT Act) would offer greater impetus to insurance agents. At present, the TDS exemption limit on the insurance commission is Rs 15,000.Read all the Latest News, Trending News, Cricket News, Bollywood News,India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.